We learned that the full cost of getting the Northwest Rail line up and running will be $1.4 billion.  This is up from the most recent cost estimate of roughly $900 million.  This cost increase reflects the requirement that RTD pay Burlington-Northern (BN) an up-front fee of over $500 million for securing permanent operations time on their tracks, as opposed to the initial assumption of annual instalment payments as part of general operations expenses.  The higher price also reflects unanticipated scope elements that BN is demanding, such as full double tracking between Boulder and Longmont.

Another kicker is the potential that the final cost of the Northwest Rail line will run as much as $300 million higher due to RTD cash flow challenges.  Under the current planning scenario, with the Northwest Rail line being the last completed FasTracks system,  RTD does not expect to have sufficient resources to complete this commuter rail system for another three to five years.  The result is an anticipated cost escalation of $150 to $300 million due to price inflation.

To be fair, the new cost estimate for  the Northwest Rail line already accounts for inflationary expenses as a consequence of placing this system at the back of the prioritization line.  The rational for this approach is that an alternative prioritization scenario would would force RTD to delay all of the other remaining FasTracks projects until the Northwest Rail line is complete.  Still, when assessing the current cost estimate for the Northwest Rail line, it is important to remember that it would be around $400 million less if construction began soon after 2012, a much more reasonable rate when compared to the cost estimates for other rail corridors.

Regardless, the sticker shock for the Northwest Rail line has forced RTD and corridor stakeholders to consider other implementation options.  Taking the first stab, the options that RTD staff placed on the table are as follows:

As noted, RTD staff recommended the hotel concept that the Union Station Alliance submitted over the competing re-use proposal from the Union Station Neighborhood Corporation.  My previous blog contains links that describe the two re-use proposals: Union Station Re-Use: How to Move Forward?  Both proposals were strong and offer substantively the same features on the first floor of Union Station; a large waiting area surrounded by amenities such as local retail stores and restaurants.

During the initial RTD Board committee vote, I stood with the minority in opposition to the staff recommendation in favor of beginning negotiations with Union Station Alliance (Team USA, as has become their popular name).  I was very clear then that my preliminary committee vote did not suggest a preference for either of the competing re-use proposals.  Instead, given the high degree of public interest from across the Denver region in the future of our iconic Union Station building, I believed it was appropriate to provide the opportunity for further public scrutiny of the two re-use options before arriving at a final decision.  This was particularly important, I felt, in light of adjustments and clarifications the two competing teams made in the their proposals during the course of initial Board deliberations.

Faced with majority Board support for moving forward on negotiations with Team USA, I ultimately joined my Board colleagues in last Tuesday’s unanimous formal decision in favor of the staff recommendation.  I took this position on the basis of a number of factors.  First, as I explained during the final Board vote, I still would have prefered additional public input prior to the negotiations phase.  However, staff has promised that they will incorporate extensive additional public input as part of the negotiations process.  Along these lines, I made clear my specific desire for open house gatherings so the public has a chance to juxtapose the proposed re-use investments against the current configuration of Union Station.

I also noted in casting my vote last Tuesday evening that I have high expectations for the remainder of the Union Station re-use RFP process.  We are now in the negotiations phase . . . and I expect rigorous negotiations.  In particular, I urged RTD staff to press hard on three specific points:  1) The first floor of the station building must provide a welcoming and comfortable environment for all citizens, particularly RTD patrons; 2) An expert analysis must confirm the Team USA financial prospectus; and, 3) The building remodel must comply with historic preservation standards.  While I will account for many other considerations in my review of any final agreement with Team USA, I believe these three criteria are of paramount importance.

All that said, I do believe the Team USA proposal and its hotel concept is the most appealing re-use option for Union Station and the regional community it serves.  The 24-hour activity that a successful hotel will generate, along with the extensive remodelling investments Team USA promises to make to the building and the attractive financial return their proposal offers RTD, hold the greatest promise for the future of Union Station.  I look forward to seeing if, through the negotiations process, we can secure all the elements that are critical to fulfilling the exciting vision for Union Station in the Team USA proposal while meeting the expectations that RTD transit patrons and our other regional stakeholders have for this important building.

The two candidate teams first pitched their proposed DUS re-use plans during a special hearing on November 3.  The following is the link to a video recording of this hearing:  http://denver.granicus.com/ViewPublisher.php?view_id=68.   More information on the competing re-use proposals is available here:  http://www.rtd-fastracks.com/dus_1.

In summary, both proposals call for a welcoming station environment on the building’s first floor that features retail stores, restaurants and other amenities which will serve the traveling public and other DUS occupants.  The major difference between the two proposals is the character of uses on the upper floors:  The Union Station Neighborhood Corporation team calls for offices while the Union Station Alliance team is proposing a hotel.  Both proposals are attractive and present different levels of risk and opportunity. 

It is clear that citizens throughout the Denver region feel they have a stake in the disposition of this iconic building.  This interest is reflected in the extensive input the Board has received from various stakeholders regarding the two re-use proposals.  To different perspectives in the Denver Post provide a taste of the input we are receiving:

• Editorial: An update, not a major makeover;
• Barnes-Gelt: RTD on the right track.

While all the initial input has been helpful, I still believe further public scrutiny of the two re-use proposals is appropriate before the Board selects its preferred candidate team.  There have been adjustments in each of the proposals since the first submissions, including substantive design changes.  Also, while much of the financial details for each of the re-use proposals is confidential, I am hoping to encourage more transparency on that front so the public has a better understanding of the approach each of the candidate teams is taking in this critical area.  

In general, I think the DUS project will benefit from additional reflection prior to selecting between the competing proposals.  The direction we take on DUS will dictate the character of this transit hub and its surrounding neighborhood for years to come.  Further public input also provides the two competing candidate teams with a chance to clarify their re-use proposals in response to recent public feedback.  Yes, we are on a tight time table for refurbishing Union Station, but clearly an additional month or so will not have a detrimental impact on the FasTracks implementation schedule.

Despite my advocacy for additional public outreach, my RTD Board colleagues may proceed with the scheduled vote on Tuesday evening.  Therefore, I am interested to hear which re-use proposal you believe is best.  I would most appreciate hearing your thoughts some time before the RTD Board’s Tuesday evening discussion.  Ultimately, our goal is to shape DUS in a manner the serves needs of rail passengers, provides the community and RTD with appropriate financial return, and creates a welcome and attractive environment as the hub of Denver’s transit system.  Your thoughts on how we achieve these goals is appreciated.

• Daily Camera:  RTD holds firm on bus route cuts in Boulder County; and,
• Denver Post: RTD board approves transit cuts but keeps some service for blind riders.

The Daily Camera article, in particular, carries two quotes from my comments during our discussion regarding the service cuts.  Specifically, it notes that I said, “[O]ur hands are tied” and “We find ourselves with our backs against the wall.”  All that is true, but it is important to clarify the context for these comments to fully understand the predicament that the RTD Board wrestled with during last night’s debate.

From the very outset of our conversation regarding the 2012 budget, it was clear that RTD was facing a very challenging year.  Staff explained that we could only balance the 2012 budget with either significant fare increases, service reductions or a combination of both.  Since we raised fares almost every year I have been on the RTD Board prior to 2012 and further fare increases would seriously jeopardize access for the transit dependant, let alone drive away discretionary customers, the focus for balancing the 2012 budget fell on service cuts.

This is where I get on my soap box regarding RTD finances.  As I have explained in previous posts, RTD is mired in a funding model that primarily ties our fate to sales tax, a revenue source that is highly volatile and has very little connection to the demand for transit service.  Thus, when the economy is in the tank and sales tax receipts drop, RTD is forced to cut service (or raise fares) during a period when the public often is more heavily dependant on transit and has less capacity to absorb increased transportation costs.  

The goal of the Long Range Fiscal Sustainability Task Force that I chaired this year was to identify operating efficiencies and revenue enhancement that would provide RTD with a more diverse financial base.  The Task Force discovered many promising opportunities, as outlined in its report (which you can read here: Fiscal Sustainability Task Force Report).  As I said last night, I will be riding staff to make sure we follow-up on all of these options.  We need to break out of the paradigm that limits our budgeting options during poor economic times to either cutting service or raising fares!

Unfortunately, most of the opportunities that the Fiscal Sustainability Task Force identified will take a year or more to implement due to the need for legislative authorization and/or further policy analysis.  So, for 2012, we were stuck with limited choices for balancing RTD’s budget.  After holding down employee costs and other discretionary spending, the final budget gap was roughly $10 million, a wide chasm representing about a 9 percent cut in RTD transit service.  It was in this context that I spoke last night of having our hands tied and our backs against the wall.

I could wax eloquently regarding the undeserved hit that Boulder County is taking in the service cuts that RTD staff ultimately proposed to cover the $10 million budget gap.  As I said last night, the staff proposal has terrible consequences for routes that are both heavily patronized and highly popular.  This includes reduced service on route 203 and the BOLT as well as complete elimination of the Superior call-n-Ride and the CC route.  Each of these adjustments is painful and I share many of the sentiments that my constituents offered in opposition, either through their direct e-mails to me or in their public hearing comments.

Of course, my fellow Board members and their own constituents offer similar appeals on behalf of service cuts in their respective districts.  In truth, when you are staring down the barrel of $10 million in service cuts, everyone feels the pain and staff did not spare any corner of the RTD district in its recommendations concerning the most appropriate adjustments to meet the budget target.  I felt fortunate that we were able to reverse a few initial staff recommendations for cuts on such routes as the SKIP and elimination of the DD routes.  Those bright spots aside, it was impossible to attract support from my RTD Board colleagues for sparing further routes in Boulder County while they accepted painful service cuts in their own districts.

As other Board members noted, last night’s vote was one of the most painful they ever cast.  Knowing that we were upholding our fiduciary responsibility to balance the RTD budget did not make it any easier to accept.  The charge now, as I suggested above, is to immediately get to work on building a more stable financial footing for RTD so we can begin to restore the service cuts we were forced to make last night and to meet the growing demand for transit service across the Denver region.

You can read about my initial response to the proposed service cuts in the Denver Post coverage from a recent RTD Board meeting:  “RTD staff backs bus, light-rail cuts to close budget deficit“.   Fundamentally, as I said in the article, the service reduction proposal is the “most powerful rationale for making (RTD’s) revenue stream more sustainable.”  That is why I spearheaded the effort to identify operating efficiencies and revenue enhancements through the Long Range Fiscal Sustainability Task Force.  The Task Force recommendations (which are available here: Sustainability Task Force Report) provide a host of options that the RTD Board and staff are assessing for implementation over the course of the next few years.

In the meantime, as RTD confronts an immediate $12 million funding gap, service cuts and fare increases are the only two significant budget-balancing options.  I have received a great deal of comments regarding the service cuts that RTD staff is proposing and share your concerns about protecting the Boulder area’s high performing local and regional routes.  We must ensure that RTD truly is making the best use of its limited transit dollars, as I explained in a recent Daily Camera article: “Boulder fears ‘profound impact on transit’ — including Skip, Jump routes –from RTD cuts“. 

In the coming weeks, I will be making the case for a more targeted focus on service optimization in the face of necessary service cuts.  I also will work with my RTD Board colleagues to identify funding which will help us maintain the most possible service during these challenging economic times.  Your continued input is appreciated during this analysis period.

For those who read my recent newsletter (which you can access through the following link:  April FasTracks Newsletter), I felt there were a number of good reasons for going to the voters this year.  Additional financial support for FasTracks would help us take advantage of low construction costs and would be an immediate catalyst for new job growth.  Further, and most important to me, additional tax financing would accelerate the completion of FasTracks, bringing bus-rapid-transit and commuter rail service to Boulder County much sooner than we can with existing resources.

Of course, we would achieve none of the above benefits if voters rejected a sales tax increase for FasTracks in 2011 . . . and that is what the political consultants, financial supporters and the public were telling us would happen.  Staff did a wonderful job summarizing the case against a FasTracks vote in 2011, as you can see here: RTD Staff Recommendation – 2011 Ballot Initiative.  In the end, the vast majority of my Board colleagues agreed with the staff recommendation and decided this was not the year to seek additional funding.

I note that the RTD Board took the unusual step of passing a resolution explaining its decision regarding a 2011 FasTracks ballot initiative.  The full text is available here:  Resolution Concerning a 2011 FasTracks Election.  In a key closing line, the resolution states, “The Board has adopted a financial plan which assumes a 2012 election and the Board will make every effort to comply with that plan.”  In other words . . . watch for us in 2012!

The main reason for the delay was some disappointing polling data we recently received.  As has been reported by the Denver Post, http://www.denverpost.com/search/ci_17669390, only 43 percent of the participants in a survey of likely voters said they would support a sales tax increase of 0.4% for FasTracks.   These numbers were surprising in light of earlier poll results that indicated 58 percent support for such a measure.  The new poll results also had a chilling effect on the perspective of some important stakeholders.  For example, we recently received a letter from John Huggins, the Executive Director for an organization that calls itself the Coalition for Smart Transit, stating, “[W]e do not believe that 2011 is the year to ask for any tax increase.” 

These recent polling numbers and the opinions of stakeholders are good arguments to hesitate on moving forward in 2011.  However, along with my fellow RTD Board colleagues, I believe we owe it to the public to give this matter more thorough consideration.  As the Denver Post also reported, http://www.denverpost.com/search/ci_17569950, we intend to further review all the polling data and to consider other “triggers” before making a final decision on a 2011 ballot initiative. 

Stay tuned (and feel free to continue sharing your input) . . .

In the meantime, others already have weighed-in on this matter.  According to those who responded to initial polling, 58 percent of the public would approve a 0.4% sales tax increase that completes the entire FasTracks system by 2018 (it actually won’t be complete until 2019 under that tax increase scenario).  Most interestingly, public support drops for a lower tax increase rate which takes longer to complete the full FasTracks system.  In the words of David Kenney, the person responsible for the most recent poll, “For most people, the value of time is as or more important than the amount of the tax increase.”

Regardless of what the polling appears to be telling us, the Denver Post is urging RTD to show some restraint.  In their editorial, “Don’t overreach on FasTracks tax,” the Post editors argue that RTD should not double the FasTracks tax in light of other competing public needs.  They even make light of those who are concerned that a lower tax increase will leave folks along the Northwest Rail Line waiting far too long for their promised FasTracks benefits.  “[I]s seven years really such an intolerable delay for a project that was first approved by voters in 2004 and wouldn’t be finished even in the best of circumstances for at least seven more years?”

More opinions on this matter are sure to come from all corners of the Denver region in the next few weeks, but I particularly hope to hear from my District O constituents.   So please feel free to drop me a line or post a response to this blog message.

Denver’s “unprecedented” last-minute bid for funding would upset the scoring system the Denver Regional Council of Governments (DRCOG) uses to appropriate federal transportation dollars.  This scoring system gives fair weight to funding requests from all communities around the region and includes flexibility to address regional equity concerns. 

Most egregiously, Denver specifically targets funds for Boulder County transportation initiatives in order to achieve its project goals.  This includes funding for enhanced Bolt bus service between Boulder, Lyons and Longmont along with support for the Lyons community Eco Pass program, which could be a model for the region.

In my own testimony last week before the DRCOG Board of Directors, which includes representatives from all cities, towns and counties across the metropolitan region, I registered my strong objection to Denver’s proposal.  By way of comparison, I noted that the RTD Board would lose trust with the citizens if we abandoned our criteria for allocating bus service in favor of arbitrary decisions.  I urged the DRCOG Board to keep trust with the citizens by relying on its established criteria in the allocation of federal transportation dollars.

I am hopeful that rational heads will prevail in next month’s final vote by the DRCOG Board.  It appears some are seeking a middle road that could satisfy both Boulder County and Denver funding goals.  In the meantime, you can register your own thoughts on this matter through the DRCOG web site at:  http://www.drcog.org/index.cfm?page=2012-2017TransportationImprovementProgram(TIP)PublicHearing.

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